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Cortana mall revitalization would depend on developers' ability to bring in more shoppers and embrace new mall concepts, local real estate pros say

Cortana Mall.jpg

Cortana Mall's owners are hopeful they'll be able to make the once-bustling, now-falling mall profitable again. But it will take a lot of work, local real estate professionals say.
(Renita D. Young, NOLA.com | The Times Picayune)

On a Saturday afternoon stroll in Cortana Mall the dearth of
shoppers is unmistakable. Retail spots typically filled with Abercrombie &
Fitch, Banana Republic or New York & Company are empty with signs letting
everyone know these spots are available for lease. Scattered fast-food joints
and mom-and-pop restaurants replace a central food court.

"Cortana is kind of dying out," laments Janice Burris, who
has shopped at the mall since it opened in 1976, but now visits mostly to shop
at Macy's.

If there's a bright spot, it's that the outlying big box
stores and strip mall retailers are surviving, even, at times, quite busy. Yet
the mall itself has seen a harsh decline in tenants. A few years ago, Dillard's
converted its space into a discount outlet, and the large space left empty when
Mervyn's closed remains a dark, vacant shell.

Perhaps the clearest sign that times have clearly changed
for what was once one of America's largest malls is that one of its top tenants
is Virginia College, a for-profit school, that took over space formerly
occupied by discount retailer Steve & Barry's.

It's a condition local real estate professionals say comes
with a changing retail climate and the introduction of a new mall into a city,
and Cortana Mall has fought these battles for more than 20 years. Many
residents began to move away from the northern part of Baton Rouge to more
affluent neighborhoods on the south side of the city. Over time, the population
in north Baton Rouge became lower-income. Since retailers tend to follow
people, they left the area, too.

Online shopping has revolutionized retail and lured many
shoppers away from stores, adding to shoppers' mass exodus from Cortana Mall.
So did the opening of the Mall of Louisiana in 1997.

Massive rebranding
planned for Cortana Mall

Thirty-three year old Shetika Hayes, who grew up visiting
the mall was so confident in its ability to bounce back, that she opted to move
her business away from busy Airline Highway to the inner parcels of Cortana
Mall less than two years ago.

"A lot of people told me not to move here, but I didn't
worry about the mall declining at the time," she says as she's curling a
client's hair. "I have faith that the mall will rebound."

Cortana Mall's newest owner, developer and manager, Las
Vegas-based private equity group Moonbeam Capital Investments said it's planning to rebrand
the dying mall to make it a key Baton Rouge destination again—the way it was
when Hayes and her family would spend hours at the mall at a time.

Since the company acquired the internal portion of Cortana
Mall for $6
million in March of last year, it initiated a rebranding campaign
that officials say will include more community events, a better variety of
retailers and possibly more food and entertainment options.

Shawl Pryor, senior vice president of Moonbeam Capital
Investments said an integral part of that rebranding effort was moving its
leasing and management internally to give the company more control over its
tenants, "...and the ability create a strategic plan for the mall itself, instead
of relying on a management company to do that for us."

Previously, Dallas-based Woodmont Property
Management managed Cortana Mall for a bank that took over the property from New
York-based Mall Properties Inc. in 2011.

Even though several failed attempts to revitalize Cortana
Mall have come and gone, Pryor suggests Moonbeam may have the silver bullet—or
is at least willing to stick around to discover what solution fits the mall
best.

"We focus on properties that are similar to the Cortana
Mall. They are tough projects, but you have to be able to stay involved and go
through the process," Pryor said. The company's key to turning Cortana Mall around,
he says, is staying "in it for the
long-haul. We're not trying to do a quick-fix to the property so we can sell
it."

Boasting a 9-million-square-foot commercial property
portfolio stretching across the United States, Moonbeam is about 10 years old
and also has office, hotel and industrial space, though 7 million of those
square feet are retail.

In addition to Cortana, Moonbeam owns Greeley Mall
in Greeley, Colo.; West Oaks Mall in Ocoee, Fla.; Five Point Mall in Marlon,
Ind.; Marshall Town Center in Marshalltown, Iowa; Burlington Center Mall in
Burlington, N.J.; and Century III in West Mifflin, Pa.

While no hard evidence exists to
suggest their strategies will work, early results suggest a good response from
its Burlington, N.J. mall, Pryor said.

Pryor notes that just creating an initial plan for turning
around Cortana Mall may be several versions away from the working strategy. "It
takes somewhere around a year or two to get a good plan in place to execute
it."

Changing from a
low-price concept

Loyalists who pop into Cortana Mall to shop at their favorite stores
have held it up in recent years, even as the mission of the mall itself had
changed. "The prices are cheaper here," said Ashkon Sarfaraz, stepping out of
Dillard's discount outlet. He's shopped at the mall since the 1980s and has
seen Dillard's turn from a typical department store to a low-price model.

Reports early in Moonbeam's acquisition show that Woodmont,
the mall's former management company was going for the low-price shopper
concept, perhaps an adjustment to the changing demographic around the mall.

"Cortana is not going to be a high-end lifestyle
center from a price-point perspective," Fred Meno, Woodmont's president and
chief executive officer of asset services reportedly said in mid-2013. "I think
Cortana can offer shopping and entertainment opportunities to a different demo(graphic)
than what the Mall of Louisiana is catering to right now, with a lower price
point, more of a discount venue."

But Pryor said since the management change, Moonbeam is
seeking out every type of retailer, another part of its rebranding strategy.

"We're looking at trying to create a
tenant mix where everyone can enjoy," Pryor said. "We
don't know today whether this will be a high-end retail center, or it could be
a center offering such an discount retailers or bring into an outlet."

And while Cortana Mall typically drew
its shoppers from the immediate surrounding area and secondarily from further
north in Baker and Zachary—where there is no large mall—Pryor declined to say
exactly where the company is hoping to draw new shoppers from under the new
plan, saying, "We'd like to cast our net wide and be able to reach out
as far as we can to bring people back."

Whether the company will opt to reconstruct Cortana Mall
into the latest open-air mall trend is still up in the air, Pryor said. But
local real estate pros said considering that option would be within Moonbeam's
favor.

"From what I'm seeing, the day of the Cortana Mall
as it is, is past," said Martin Mayer, president and chief executive officer of
Stirling Properties, which once considered bidding for the property. "To me the
Cortana Mall would really need a major overhaul, not a cosmetic change. Part of
it would have to be demolished and 'de-malled,' maybe turned into a different
configuration."

Mayer, who has been in the retail development
business for nearly 40 years, notes, "Retail is a trailing phenomenon.
Retailers follow the shoppers. If they choose not to go to a specific area,
they usually have a reason."

Cortana
Mall 'not lost to investment'

Though Cortana Mall has fallen to other mall
developments over the years, the area around it is seeing activity, which could
take an effect on the mall. Mark Hebert of Baton Rouge-based Kurz and Hebert
Commercial Real Estate said recent projects along Florida Boulevard instill a
sense of hope for the Cortana Mall.

Hebert said in addition, his company has clients
eyeing property in the neighborhood, including a national discount retailer and
an auto service company. "We also have tenants handling proposals for the old
Piggly Wiggly at Florida Boulevard and Donmoor for the 32,000-square-foot box
that's been empty for about four or five years."

"The area is not lost. Investment in the
area is not lost," Hebert said.

To be successful, Cortana Mall would also have to concede to
changing industry standards, Hebert said, where many stores draw a larger
customer base from online shopping. 'Technology has had a big effect on retail.
They're going to have to figure out how they're marketing strategy fits with
technology."

Possible
entertainment venue at Cortana Mall

If Cortana Mall decided to add an entertainment venue, such
as a cinema, it would have a monopoly on the northern area of the city. Meno,
who's company formerly managed Cortana Mall introduced the idea of building a movie
theater at the mall in 2013. Many of Baton Rouge's movie theaters are heavily
concentrated in the southern parts of the city.

Though current workers said they heard chatter about a
possible movie theater, Moonbeam officials were unable to confirm. "I heard
about that. That would really be great," Hayes, the hairstylist said.

A source close to the project says Moonbeam does plan on
adding an entertainment component in the near future, but could not confirm
what type of venue or when the addition would take place.

Nonetheless, a possible entertainment venue could help
revive the dying mall.

Creating an "experience" out of visiting Cortana Mall could
take several versions of marketing plans before Moonbeam Capital Investments
sees some improvement. Whether or not Cortana could survive the next generation
of malls is questionable. So is its ability to return to its former status as
the flagship mall of Baton Rouge. But Pryor said the company is willing to do
whatever it takes to make it a success. "We just ask for
people to continue to support the mall as we go through that transition to
reposition the mall."